You could claim back all of the VAT and be exempt from company car tax
Business Contract Hire is fast becoming the most popular form of business leasing here in the UK.
A company, or sole trader, has the use of a brand new car of their choice for a period of time, with no road tax to pay for the duration of the lease contract and a full manufacturer warranty is included.
Fixed monthly payments are paid for the period of the lease and at the end of the contract the car is returned and a completely new lease contract may be taken out if required.
Who is eligible for a business lease?
You can get a business lease contract if:
- You are a sole trader
- You have a Ltd. company
- You are a VAT registered business
- You have a partnership with less than 4 partners
So what are the benefits of business leasing?
If you or your company is VAT registered and you lease a car, you can claim 50% VAT back on your monthly payments. If you use the car entirely for business use only (not used for travelling to and from work), then you could claim 100% back.
However, you can claim the monthly lease costs against profits but the percentage can vary. If the car you lease emits more than 160g/km you can only claim back 85% but if the car emits anything lower you are allowed to claim 100% back.
What about company car tax – do I have to pay it?
You might have to pay company car tax if you use the car for personal use such as driving to and from work.
If however the car is left at your workplace overnight and only used for business purposes, you will not have to pay company car tax.
Also, you don’t have to pay company car tax if:
- You’re a sole trader
- You are a member of a Limited liability partnership
- You’re a partner or in a partnership
Leasing rather than buying also means you don’t have to deal with selling the car when the time comes and having to worry about depreciation.
Please click here to find out more about our car leasing services and special offers for both business and personal use, or give us a call on 0844 846 4007.